Silver finished the week on an upstroke, but the pattern that produced it may be too obvious to sustain the steep trajectory. The low occurred just a tick or two beneath mid-August's 22.58 bottom, implying the turnaround was just bulls and bears scaring themselves into action. That's nearly always good for a pop, since the former were stopped out and no longer on board to slow down the rally. The pattern should work for bottom-fishing a swoon to the green line (x=22.83) 'mechanically', but we won't be able to judge buyers' enthusiasm until such time as they interact with the 23.67 target of the rABC pattern. _______ UPDATE (Sep 20, 8:41 p.m.): Here's a mildly bullish chart to help you leverage Silver's churlishness. Because today's nasty reversal did not quite reach the red line on the upswing, I cannot recommend a 'mechanical' buy if its fall hits the green line.
GDXJ is all but certain to rally to at least 36.78, the D target of the pattern shown. Bulls clinched that outcome on Friday when they blew past the 35.52 midpoint resistance with a gap-up opening and never looked back. But what happens thereafter will tell us whether the rally is any different from umpteen previous rallies that ended in disappointment. An easy move through the target would suggest the uptrend is getting legs for a shot at significantly higher prices. An uncorrected continuation that tops July's 38.09 peak would strongly suggest bulls have returned in force. _______ UPDATE (Sep 19, 10:20 p.m.): If you missed boarding at the 9/7 low, this vehicle will become an opportune 'mechanical' buy if and when it gets down to x=34.60. I'd suggest buying stock (stop 33.86) or naked-shorting puts, but buy calls only if using a small-pattern (i.e., camouflage) trigger that can get you in near the exact low, time-wise.
Bulls appeared tapped out as the week ended, unable to fill the gap formed by Thursday's air pocket. To make matters worse, the stock settled just beneath the lower end of the gap range, implying the DaBoyz couldn't even mau-mau shorts into displaying a little fear. This will be problematic when index futures begin to trade Sunday evening, since the broad averages weren't exactly looking frisky either. Expect more slippage to the 164.90 target of the reverse pattern shown. Getting short is certain to be tricky, since everyone else will be trying to do it too.
The bullish pattern shown looks incapable of guile, so we don't have to stick out our necks very far to heap opprobrium on those who can't stop obsessing over 'inflation' and a dollar supposedly headed into BRIC-induced oblivion. As I will continue to point out, the last thing the world needs right now is a strong dollar, since it would increase the burden of debt for all who owe dollars. That is reason enough for DXY to keep on rising, since the mounting troubles of borrowers in and of itself will continue to exert mild short-squeeze pressure on the buck. Accordingly, we should expect the rally to continue to at least p=106.32 over the near term. When DXY pops thought that Hidden Pivot resistance, presumably headed for D=113.06, we'll see some erstwhile dollar bears start to break ranks. Recession will be full upon us by then, even if unheralded by mainstream news sources.
Crude spent the week head-butting the 88.11 target shown. I'm not a big believer in rallies driven by artificial constraints on supply, but our enemies have shown enough persistence and cohesiveness to suggest they can hurt America economically. Pump price are pushing above $4 for regular gas, amounting to another stab in the eye for Wall Street shills who as recently as two weeks ago were talking about, not a soft landing, but about no landing. So much for bullish spin, even if Americans seem to have an inexhaustible supply of surplus dollars to foot the bill for rising energy costs that will push up prices for nearly everything Above 88.11, this pattern, with a 98.84 target will be well in play.
Last week's moderate weakness failed to achieve the green line (x=4454.25), where we've been looking to do some bottom-fishing. The stop-loss for the relevant pattern would be just beneath C=4397.75, implying entry risk of about $2,800 per contract. That means we'll need to craft a trigger on a chart of lesser degree in order to bring the risk down by around 90%. Although I am confident this 'mechanical' trade will produce a profit, I cannot guarantee that the implied bounce will get much farther than the red line, where we would typically take a partial profit. _______ UPDATE (Sep 13, 11:42 p.m.): Night owl special: Use the 4533.75 target of this pattern and a 1.75-point trigger interval to get short. This trade is for Chat Room 4 denizens only. _______ UPDATE (Sep 14, 8:41): Even though it went against an uptrend driven by lunatics and thieves, the short advised last night proved to be a lay-up. The futures dove 12.25 points after topping two ticks above the 4533.75 target drum-rolled above. Executing the trade with the 1.75-point trigger suggested, then partially covering the short at p and D, would have yielded a $475 profit in under 30 minutes. However, the eventual drop to 4522.00 could have produced additional gains worth $600 more per contract. Here's the chart. The futures have since lunaticked to higher highs ahead of the opening, but what do we care? We simply carved out an easy trade in the midst of the usual headless-chicken price action.
Bulls and bears ended the week playing patticake, somewhat shy of the green lie (x=1934.0) where bottom-fishing would become mildly enticing. A one-level bounce seems likely, although the pattern's elongated B-C leg has diminished the bullish impulsiveness of this picture sufficiently to make a run-up to D=1995.00 less than an even bet. Although that's unlikely to stoke your enthusiasm, we should try nonetheless to get a piece of the implied 'mechanical' bounce that is indicated with a tight 'reverse trigger'. Tune to the chat room for possible guidance on this. _______ UPDATE (Sep 12, 7:59 a.m. EDT): The futures have in fact come down to the green line, implying it's time to set up a trigger for the 'mechanical' buy suggested above. On the hourly chart, the nearly 4-point 'natural' a-b is a little rich for my taste, so I am using a= 1947.30 (9-11 at 9:00 a.m.) to set up the trade with a $$1.70 TI. Based on the so-far low at 1933.40, the trade triggered a few minutes ago at 1935.10. First partial profit would be at p=1936.70. For comparison, the more natural a-b, where a=1939.50 on 9-10, would trigger at 1937.40, based on the so-far low at 1933.40. We shall see. _______ UPDATE (Sep 13, 6:20 a.m.): Although the small pattern got stopped out for a $170 loss per contract, the more 'natural' $4 trigger went on to produce a gain of $380 in about an hour. This is not bad, considering we went long against weak, sloppy price action. Here's an interesting chart from Erik Volma at Gold-Eagle.com. It shows what gold prices did during stock market crashes going back to 1970.
The futures tripped a reverse-pattern buy signal Thursday night and then went blotto on Friday, unable to poke above the green line for more than a few minutes after three tries. There was no reason to hold a position over the weekend, but if you did anyway please let me know so that I can decide whether to provide a tracking position. Usually when a clear signal like this one produces...nada, it means the dominant trend -- in this case down -- will continue. Since I don't have a crystal ball to predict how this mud-dog will open Sunday night, I will wait for it to instruct me. If I had to guess, I'd say traders will scare themselves to death with a gratuitous feint beneath C= 23.13, paving the way for a weak bounce that will not likely be tradeable unless we're glued to the 3-minute chart.
This vehicle served up a profitable dollop of dreck on Friday's opening bar, triggering a reverse-pattern entry at 34.14 that was spelled out in my tout. Making actual money on the trade would have been fairly easy, since GDXJ pulled back to the green line where the trade triggered after busting through it in the first minutes of the session. The surge got past p2=34.69, implying you could have been out of 3/4 of the position before the rally succumbed to gravity. The plunge was so relentless and dispiriting that we can only infer that still lower prices impend. A hidden Pivot support at 33.79 is the closest target. Since it is but an inch beneath last week's low, we might expect a tradeable reaction with a 'counterintuitive' (i.e., rABC) trigger interval of 0.23. The pattern yielding the 33.79 target starts on the 30-minute chart with A=34.80 on 9/6 at 10:00 a.m.
Can the Wall Street Journal's headline writers save America's juiced-up economy from going bust? They are certainly trying. Check out the lede atop Friday's editions: The Fall in Home Prices May Already Be Over. Fancy that! With mortgage rates headed toward 8%, many readers must have done a double-take when they scanned this seeming howler. Your editor wondered why the copy desk had not punctuated the headline with three or four exclamation points, lest the story fail to goad potential buyers who have been sitting on the sidelines into action. However, the article itself, written by one Nicole Friedman, had a somewhat more nuanced take on the housing market. Although she gave Realtors an opportunity to do some boisterous cheerleading for the industry, she did not allow them to claim that residential sales are strengthening. For how could they be? It turns out that prices are no longer falling because transactions have all but dried up. Few homeowners are listing these days because the price of any home or apartment they might move into would be just as pumped up. Although there are probably millions of Baby Boomers who would love to downsize in order to free up more money for retirement travel and other pleasures, it seems increasingly unlikely there will ever be buyers for their homes at today's insane prices. Millennials and Gen-xers are already so tapped out that they can't even pay back student loans, let alone buy their parents' 4,000-square-foot McMansions in the suburbs, or keep Social Security and Medicare solvent. Our kids will eventually inherit the homes, even if they are unable to afford upkeep and taxes. It is predictable that lawns will go to seed and that the amenities of suburban towns will wither for lack of property-tax revenues. What AAPL Is Saying Here's
